5 Signs You're Dealing With Someone Who's A Fraud

Just one bad apple can have awful consequences (see Madoff, Bernie or Kozlowski, Dennis).

But how to spot the bad apples when you're picking from the tree?

On the company's website, Crowe Horwath LLP Partner and Leader of Fraud, Ethics, and Anti-corruption Services, Jonathan T. Marks has published a short paper detailing tell-tale signs that might help someone sort out who will be an asset to their business and who could wreak major havoc and "spoil the bunch."

We've combed through it and delved deep to look at what these signs are and how you might be able to use them.

The person exhibits exorbitant spending and lewd behavior

The existence of a "moral compass" is a major factor in how people approach every aspect of their lives and Marks argues that, because of that inherent spillover, any questionable behavior in someone's personal life (exorbitant spending, lewd behavior, etc.) will inevitably take shape in their professional one.

And an inability to perceive a lack of scruples in a business associate can have lethal consequences, like in the case of a little-known investment advisor named Bernie Madoff for instance… Source

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He or she has shady friends and/or family

Garth Brooks famously had "Friends in Low Places."

According to Marks, this would be a great reason to exclude him as a person to potentially connect with your business activities as the family, friends and associates of a person have primal input into who that person will look to attract in his or her professional life.

Basically, if you choose to work with a guy like Garth and he then chooses to involve his unsavory associates, therefore putting your business art risk... you asked for it.

Charm, distance and a proven track record of avoiding face-to-face conversations are all white flags that someone is looking to deceive, says Marks.

Telling people what they want to hear from afar while doing something else entirely, is how many dishonest people honestly (ironic) believe they will make their fortunes. But while many inveterate deceivers in the world of business are talented "spin-meisters," Marks calls attention to a study conducted by Stanford University that identifies certain linguistic choices that will out liars in the course of their lies. Quoting Marks, untrustworthy associates will do the following;

Disavow ownership by using words like "the company" or "the team" when they talk about their company. They avoid saying "I."

Emphasize extreme positive emotions, using words such as "fantastic" instead of merely "good" or "solid" to mask a mediocre underlying performance.

Answer questions indirectly with short, prepared statements to deal quickly with areas of deceit and then redirect conversation.

He or she thinks they are above the rules

Marks quotes a Fortune Magazine article in which a psychiatrist that interviewed jailed Enron CEO Jeffrey Skilling and concluded that his "arrogance springs from the same well of confidence that led him to the big chair at Enron."

And that hyper-confidence/arrogance can lead people to feel outside the realm of rules and laws that govern the lesser, or less-confident amongst us, and that self-deception can often lead the arrogant businessman (much like seems to have been the case with Skilling) to engage in unscrupulous activities to which they feel entitled.

The person thinks TOO creatively

The always creative MacGyver

Yes, you read it right, while it is an avowed talent in the world at large, creativity can be a major concern in choosing associates in business.

And the positive aspects of being creative is the inherent problem with having a creative person in your business dealings. The urge to create something new and different is an urge that can also mutate very easily into fraud if left unchecked.

But Marks does temper his fear of creativity by admitting that keeping creative, "outside-the-box" thinkers can be real assets if kept in some kind of box and directed effectively.

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